| Updated and republished on 27th of May, 2025 |
| This blog was originally posted on 22nd May 2024 and has been updated for clarity, relevance, and accuracy. |
In the past year and a half, the global cocoa market has experienced one of the most volatile periods in its history. After surging over 300% in 2024 due to a combination of supply shocks and speculative activity, cocoa prices reached a record high of USD $12,931 per metric ton in early 2025. Prices have since dropped, falling below USD $8,000 in March before stabilising around USD $9,000 in May. This rollercoaster trajectory has created uncertainty across the chocolate value chain, affecting farmers, manufacturers, and brand owners. At Luker Chocolate, we believe it's critical to unpack what’s driving these fluctuations and what it means for the future of cocoa sourcing.
Despite this, uncertainty persists. Market participants are closely watching mid-year weather forecasts to assess production for the 2025/26 season.
Through this blog, we want to show you the main drivers behind the notable volatility in cocoa market prices, explore its implications for various stakeholders, and discuss alternatives moving forward.
- What is behind cocoa price volatility?
- Implications of Price Volatility for the Industry
- Are farmers benefiting from the cocoa price context?
Understanding these price fluctuations is crucial. The change in cocoa prices conditions the entire supply chain: farmers in cocoa-producing regions, chocolate companies, and end consumers purchasing chocolate products.
What are the factors contributing to cocoa price volatility?
El Niño phenomenon and crop diseases
The El Niño weather pattern has significantly disrupted cocoa production in major producing countries. Characterised by high temperatures and low humidity, El Niño conditions have severely impacted cocoa harvests in regions like the Ivory Coast and Ghana, which account for approximately 70% of the world’s cocoa supply.
The 2023/24 season was heavily impacted by El Niño, which brought prolonged periods of drought and high temperatures to West Africa — where over 70% of the world’s cocoa is grown. These conditions damaged flowering cycles and reduced yields. Simultaneously, the International Cocoa Organisation (ICCO) reported that the spread of swollen shoot virus in Ghana decimated over 500,000 hectares of cocoa farms, contributing to the lowest national output in 14 years. For 2025 the global cocoa production is expected to be 8% higher than 2024, reaching 4,840 million tonnes
As projected, the % reduction in Ghana’s cocoa production for the 2023/24 season marked the lowest in 14 years. Such significant reductions in output from key producing regions inevitably tightened global supply, resulting in upward pressure on the market price.
Investor Speculation
Investor activity further contributed to price volatility. According to a report by J.P. Morgan on 3rd April 2024, the initial supply issues exacerbated by dry weather conditions were intensified by investor speculation. Speculation significantly amplified market movement. Non-commercial investors dominated the futures market in early 2024, holding over 60% of positions. Their rapid exit in Q1 2025 triggered sharp corrections. While speculative activity has now decreased, price sensitivity remains elevated, with market sentiment swinging quickly in response to new data releases or forecasts.
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*The Impact of EU Regulation on Deforestation-free Products (EUDR) The EU Regulation on Deforestation-free Products (EUDR), which was designed to combat deforestation, could potentially impact the market. These regulations require cocoa-producing countries to implement comprehensive due diligence processes, with sustainable chocolate manufacturers that prioritise traceability systems, data collection, verification of producers, assessments of deforestation risks, and active monitoring of deforestation and human rights enforcement. The long-term effects of these measures on the cocoa supply remain uncertain as the industry adjusts to these new compliance and monitoring requirements. It is still uncertain whether the regulation will increase supply pressure and impact prices. Dive deeper: Understanding the new EU Deforestation Regulation on cocoa |
Are farmers benefiting from the cocoa price context?
Price volatility poses one of the biggest challenges for cocoa farmers worldwide. Just like you, farmers face challenges planning production and managing finances amid volatility and high uncertainty. Ensuring that farmers receive fair and stable prices for their cocoa is crucial for maintaining the sustainability of the supply chain.
Record cocoa prices in 2024–2025 sparked an urgent question across the industry: Are farmers, the very foundation of the cocoa supply chain, truly benefiting? The reality is complex. In many producing countries, farmgate prices have remained disconnected from global markets.
At Luker Chocolate, we’ve taken a different approach: Fair pricing as a long-term commitment
Improving cacao family incomes: We are committed to increasing the incomes of cacao-growing families by improving profitability, enhancing quality, and creating more direct market connections. Our efforts focus on optimising productivity and refining post-harvest processes, while strengthening cacao associations through capacity building in administration, commerce, and governance. Additionally, we actively promote entrepreneurship and income diversification, equipping farmers with opportunities to expand their revenue streams and build stronger, more sustainable livelihoods within the cacao sector.
We maintain a direct relationship model that ensures producers receive fair compensation, even amid market volatility.
Between May 2023 and April 2024, we paid farmers in our supply chain an average of USD $8,025 per ton—approximately 81% of the global futures price. This compares favorably to the 49–53% share typically passed on to farmers in Ghana and Ivory Coast during the same period (GlobalData, 2024).
Continuing this commitment, from January to April 2025, we have transferred an average of 84% of the global futures price, amounting to roughly USD $7,652 per ton.
To better respond to market volatility, we shifted from weekly purchasing agreements to daily agreements. These prices include:
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Base pay aligned with the NYSE Free on Board (FOB) reference
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Additional bonuses for quality, sensory profiles, and fermentation techniques
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Timely payments with full transparency and documentation
Prices received by farmers in the Luker supply chain, compared to the global price from may 2023 to april 2024
This increase in income has reflected a higher quality of life for farmers and also the opportunity for them to invest in their farms through better infrastructure, fertilisation, and crop maintenance, among other things. This positive outcome will also help ensure stable sourcing in the coming years, as the effect will be seen in the following harvests.
Collaborative work with farmers goes beyond fair pricing. We engage in daily purchasing agreements, re-structured to provide a steady income for farmers and help them plan their production more effectively. This consistency is crucial, especially during market instability, as it ensures that farmers can invest in their farms and sustain their operations in times of higher prices, allowing them to navigate the impact of market volatility on their livelihoods when lower prices hit.
Why it matters now more than ever
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This income differential has had measurable impact:
In addition to pricing, Luker works closely with its network of farmers through:
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Our focus remains on building stability from the ground up, especially in volatile years. Empowering farmers to thrive under shifting market conditions is not only fair — it’s strategic. Long-term sourcing resilience depends on healthy, motivated producer communities.
Our longstanding partnerships with cocoa farmers ensure a consistent and stable supply of high-quality cocoa.
The way forward: What is the prediction for the cocoa market?
These have been exceptionally challenging times for everyone involved in the cocoa industry. Higher prices are not always transferable to the final product, and we have all had to sacrifice short-term profitability to ensure long-term sustainability. We have tried to absorb some of the cocoa cost increases with efficiencies in our supply chain and inventory optimisation. However, we have had to change prices to maintain our commitment to small farmers and secure the cocoa needed to respond to our customers’ demand.
At Luker Chocolate, we believe this moment calls not for reactivity, but for resilience, built collaboratively.
What we’ve learned makes a difference
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Proactive engagement: Aligning on sourcing strategies early to mitigate exposure
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Shared transparency: Open communication channels with partners and consumers to understand the actual dynamics behind chocolate sourcing.
Our ongoing commitmentWe continue to:
Whether you're navigating sourcing, formulation, or compliance, our role is to be a business ally—not just a supplier. Let’s keep building the future of chocolate together, even when the market gets complicated. |
The uncertainty in the market may lead some to prefer fixing prices and transferring cost reductions to ensure their businesses’ viability. Others may opt for a more short-term approach, prioritising flexibility to react to fluctuations in both directions. This decision is difficult and depends greatly on each company’s business strategy and market position. Consistent with our B4B nature, our commitment is to help our clients find the best solution possible to fit their market needs, leveraging our proximity to farmers and direct sourcing model to ensure sourcing consistency.
As you, we are working hard to adapt to and navigate this difficult context. In this process, we have realised that the best way forward is to work with our clients and suppliers to find ways to generate additional value through our chocolate. Whether that is preparing for new regulations like the EUDR, innovating in response to new consumer demands, or sharing our technical expertise, we are committed to helping our clients grow.